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Overstock Falls 3.4% after Posting Disappointing 1Q18 Results

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Online retailer Overstock (OSTK) fell 3.4% in aftermarket trading on May 8 after the company reported its 1Q18 results. Its revenue of $445.3 million missed analysts’ estimate of $454.1 million, and its adjusted loss per share of $1.74 was greater than the estimate of $0.91.

Year-to-date, Overstock stock had fallen 40.3% as of May 8. The frenzy surrounding bitcoin and other currencies has started to ebb, and the company’s dismal quarterly performance hurt its stock.

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The quarter in detail

In 1Q18, Overstock’s revenue grew ~3% YoY (year-over-year), driven by marketing initiatives. However, the company added that changes in Google’s natural search engine algorithms have continued to impact its revenue numbers. Whereas Overstock is working to resolve the issue, it’s taking longer than expected.

Higher sales of wider-margin (home and garden) products boosted its gross profit by 8% to $93.9 million in 1Q18. The company’s sales and marketing expenditure rose 105% YoY to $77.2 million, and its technology and G&A (general and administrative) costs rose 7.9% and 75.8%, respectively.

Ballooning expenses expanded its operating loss to $54.4 million from $2.3 million in 1Q17, resulting in a greater loss per share. Overstock’s loss per share grew YoY to $1.74 from $0.23.

Overstock has cautioned that it expects to continue to report losses as it diverts resources to boost its retail operations, tZERO, and Medici Ventures. We’ll soon publish a more detailed analysis of Overstock’s 1Q18 results.

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